Glossary (continued)

Notice Of Completion – A notice, recorded to show that a construction job is finished. The length of time in which mechanic’s liens may be filed depends upon when and if a notice of completion is recorded.

Notice Of Default – A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).

Occupancy - A physical presence within and control of a property.

Offer – A presentation or proposal for acceptance, in order to form a contract. To be legally binding, an offer must be definite as to price and terms.

Occupancy Rate - The percentage of properties in a given area that are occupied.

Off-Site Improvements - Buildings, structures or other amenities which are not located on a piece of property, but are necessary to maximize the use of the property or in some way contribute to the value of the property.

Original Equity - The amount of cash a home Buyer initially invests in the home.

Original Principal Balance - The total amount of principal owed on a mortgage loan at the time of closing.

Origination Fee - Refers to the total number of points paid by a borrower at closing.

Owner Financing - A transaction where the property owner provides all or part of the financing.

Owner Occupied – Property which is not designated by law as real property.

Ownership – Rights to the use, enjoyment, and alienation of property, to the exclusion of others. Concerning real property, absolute rights are rare, being restricted by zoning laws, restrictions, liens, etc.

Partial Interest - A shared ownership in a piece of property. May be divided among two or more parties.

PARTIAL PAYMENT - A payment of less than the regular monthly amount. Usually, a lender will not accept partial payments.

Payment Cap – A maximum amount for a payment under an adjustable Mortgage Loan, regardless of the increase in the interest rate. If the payment is less than the interest alone, negative amortization is created.

Payoff – The payment in full of an existing loan or other lien.

Periodic Payment Cap - The limit on how many regular monthly payments on an Adjustable Rate Mortgage can change during one adjustment period.

Periodic Rate Cap - The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period.

Personal Property - Owned items which are not permanently affixed to the land.

Piggyback Loan – A loan made jointly by two or more lenders on the same property under one mortgage or trust deed. One 90% loan, for example, may have one lender loaning 80% and another (subordinate) lender loaning the top 10% (high risk portion).

PITI (Principal, Interest, Taxes And Insurance)

Used to indicate what is included in a monthly payment on real property. Principal, interest, taxes (property) and insurance (hazard) are the four major portions of a usual monthly payment.

Planned Unit Development (PUD) -

A coordinated, real estate development where common areas are shared and maintained by an owner’s association or other entity.

Plat - A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.

Point - A percentage of a mortgage amount (one point = 1 percent).

Power Of Attorney – An authority by which one person (principal) enables another (attorney-in-fact) to act for him. (1) General power authorizes sale, mortgaging, etc., of all property of the principal. Invalid in some jurisdictions. (2) Special power specifies property, Buyers, price and terms. How specific it must be varies in each state.

Pre-Approval - The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with Sellers.

Preliminary Title Report – A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title insurance policy is issued.

Prepayment - Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.

Prepayment Penalty - A fee that may be charged to a borrower who pays off a loan before it is due.

Pre-Qualification - Less formal than pre-approval, pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage loan.

Prime Rate - The interest rate that banks and other lending institutions charge other banks or preferred customers.

Principal - The amount owed on a mortgage which does not include interest or other fees.

Principal Balance - The outstanding balance of principal on a mortgage. Does not included interest due.

Principal, Interest, Taxes, & Insurance (PITI) - The most common constituents of a monthly mortgage payment.

Private Mortgage Insurance (PMI) - A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.

Promisee – One to whom a promise has been made, such as the lender under a promissory note.

Promisor – One who makes a promise. The borrower under a promissory note.

Promissory Note – A promise in writing, and executed by the maker, to pay a specified amount during a limited time, or on demand, or at sight, to a named person, or on order, or to bearer.

Property - Any item which is owned or possessed.

Proration – To divide (prorate) property taxes, insurance premiums, rental income, etc., between Buyer and Seller proportionately to time of use, or the date of closing.

Public Records – Usually at a county level, the records of all documents which are necessary to give notice. The records are available to the public. All transactions for real estate should be recorded.